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Cheng-te Lee and Shang-fen Wu
''Military Spending and Stochastic Growth: A Small Open Economy''
( 2015, Vol. 35 No.4 )
In a stochastic endogenous growth model, the effects of military spending on economic growth are explored. In addition to the traditional crowding-out effect, we show that the portfolio effect also plays an importance role in determining growth rate in a small open economy. We find that there exists a non-linear relationship between the defense burden and the economic growth.
Keywords: Military spending, Stochastic growth, Small open economy
JEL: H5 - National Government Expenditures and Related Policies National Government Expenditures and Related Policies: General
O4 - Economic Growth and Aggregate Productivity: General
Manuscript Received : Sep 24 2015 Manuscript Accepted : Oct 02 2015

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